Secret recording stirs troubled waters for Attorney General Swallow

SALT LAKE CITY — Future Utah Attorney General John Swallow and indicted businessman Jeremy Johnson talk about whether thousands of dollars that changed hands were to a pay off a powerful member of Congress or to hire lobbyists in secret recording that became public this week.

Johnson insists the money was meant to buy Senate Majority Leader Harry Reid's influence to end a Federal Trade Commission investigation into Johnson's Internet marketing company. Swallow says he understood it would be used by his friend, Richard Rawle, to hire federal lobbyists on Johnson's behalf.

But before the hourlong conversation ends, Swallow, who repeatedly says he did nothing criminal, sounds like he thinks he could be the subject of a federal investigation that could end his career as a lawyer.

"At the end of the day, I don't want to be a felon when I'm not a felon," Swallow says on the recording given to The Salt Lake Tribune and posted on its website.

"I don't think they care about you," Johnson says. "They want Reid."

Reid has disavowed any knowledge or involvement of Johnson's case.

“The allegations of bribery by Mr. Johnson, a man with a background of fraud, deception and corruption, are absurd and utterly false. Bribery is a crime for which Sen. Reid has personally put people behind bars. Sen. Reid will not have his integrity questioned by a man of Mr. Johnson's low record and character, and his outrageous allegations will not go unanswered. Clearly, a desperate man is making things up," according to Reid spokeswoman Kristen Orthman.

Swallow, too, has denied any wrongdoing.

"The release of this recording confirms everything I've said about this from the beginning. I did not do anything illegal and I encourage Mr. Johnson to fully cooperate with the ongoing investigation," he said.

The U.S. Attorney's Office for Utah acknowledged last week that it is investigating Johnson's claims.

University of Utah political science professor Matthew Burbank said the problem for Swallow is that the recording keeps the story alive and tends to make it look more "graphic."

"It continues this drip, drip, drip of evidence and it's the kind of thing as a newly elected attorney general you don't want to have to spend your time talking about or worrying about, yet there's really no way to avoid it," he said.

Burbank said Swallow has to be concerned about public perception.

"What you don't want is the sense that you were doing these things and maybe it wasn't technically illegal but it looks bad," he said. "As an elected official, particularly as attorney general, you have to worry about that."

The FTC alleges Johnson bilked consumers out of more than $275 million with deceptive "trial" memberships to bogus government grants and money-making schemes. Federal authorities shut down his company, iWorks, and seized all of Johnson's assets in 2011. Johnson also faces criminal fraud charges associated with his business.

Johnson secretly recorded the April 20, 2012, conversation with Swallow at a Krispy Kreme doughnut shop in Orem.

The St. George man said Tuesday that the recording wasn't his idea.

"My attorney wanted me to do it, so I did it," he said. Johnson's lawyer, Nathan Crane, did not return an email for comment.

In fall 2010, Johnson had sought help from Swallow, who was then the chief deputy attorney general, when iWorks was being investigated by the FTC. Swallow introduced him to Rawle who he said had connections to federal lobbyists who might be able to help for a hefty fee.

"I think you may have the wrong idea," Swallow tells Johnson at one point, adding, "I don’t know what the arrangement is, but I think, I think that they have lobbyists they pay on retainer."

Johnson and his business associate paid Rawle $250,000.

Rawle, who set up a company called RMR Consulting after meeting with Johnson in October 2010, said in an affidavit that he paid lobbyists with a portion of the money and took $50,000 for his fee, part of which he used to pay "miscellaneous" expenses. One of those bills was from Swallow for consulting on a cement project Rawle had in Nevada.

Swallow later returned the check, which came from the RMR account, and asked that it come from another account. Rawle then paid Swallow $23,500 from another account, according to the affidavit Rawle signed Dec. 5, 2012, three days before he died of cancer.

"At the end of the day, I felt the FTC was screwing you. I wanted to help you with that. I knew I couldn't do it myself, so I lined you up with Richard who I thought could help you," Swallow says on the recording.

Johnson replies that even though he didn't pay Swallow to "hook us up on this Reid deal," federal investigators would try to paint that picture.

"They will be able to get an indictment. They will flash that out in the news and it will be a nightmare. It doesn't matter if that's the truth or not," Johnson said.

On the recording, Johnson tells Swallow he and his business partner want $175,000 back from Rawle because "nothing happened. We were promised the world and got nothing in return."

Johnson recounts a meeting that he says Swallow attended where buying off Reid was discussed. He also talks about an email he says Swallow sent him after the meeting where "you spell it out very clearly that the money's going to influence Reid."

Swallow says he wasn't at the meeting and that he doesn't recall the email.

"You assured me that is what we needed to do to get the issue take care of," Johnson said. He also tells Swallow he will give him copies of the emails.

"I thought that if anybody could do it, these guys could. But I don't know for sure anything could be done," Swallow replies.

Johnson then agrees that Swallow didn't guarantee anything.

On Sept. 29, 2010, Swallow sent an email to Johnson saying he had talked to Reid's guy, Rawle.

"Richard is traveling to LV tomorrow and will be able to contact this person, who he has a very good relationship with. He needs a brief narrative of what is going on and what you want to happen. I don't know the cost, but it won't be cheap," Swallow wrote.

It's unclear from the audio file whether it was that email or others to which Johnson was referring.

Johnson, who does most of the talking in the recording, says federal investigators want to talk to him and that he thinks the FBI might be looking into Swallow. He tells him that the emails Swallow sent — the ones Swallow says he doesn't remember — would be damaging to him.

"I could bury you easy, say John got us into this," Johnson says.

Swallow, who was engaged in the Republican primary election at the time, worries that "with this stuff hanging over my head, I don't know where I'll be … I need to see those emails before I know what I'm doing."